FG approves N701bn payment guarantee for power firms

The Federal Government on Wednesday approved N701bn payment assurance guarantee for any energy produced by the electricity generation companies through the Central Bank of Nigeria in order to strengthen the Nigerian Bulk Electricity Trading Plc, has also

It also approved a short-term financing option for two ongoing projects, the Lagos-Ibadan Expressway and the Second Niger Bridge.

These were some of the decisions taken at the Federal Executive Council meeting presided over by the Acting President, Prof. Yemi Osinbajo, at the Presidential Villa, Abuja.

The Minister of Information and Culture, Alhaji Lai Mohammed; Minister of Power, Works and Housing, Mr. Babatunde Fashola; and Minister of Agriculture, Chief Audu Ogbeh, briefed journalists at the end of the meeting.

Fashola recalled that the council had a few weeks ago announced the approval for early works for the second Niger Bridge, which is a Public-Private Partnership initiative.

He added that some private agreements had been signed to build the Lagos-Ibadan Expressway.

The minister said he briefed the council on the PPP status of the projects and presented options to the government.

He said the essence was that where those PPPs were having problems, the government must lead and finance the infrastructure, while continuing to engage the private sector.

Fashola said, “Government remains committed to having private participation in infrastructure renewal. But government as a matter of strategy thinks that it can continue until financial closures, agreements and all of that are put in place when PPPs become ready and viable to help deliver.

“So, it was a strategy memorandum. The conclusion essentially is that government is committed to doing short financing as much as possible and encouraging PPP as much as possible.”

He said the decision to approve payment guarantee for the NBET was meant to solve some of the liquidity problems, especially as they related to the government firm that buys power from the generation companies.

The minister said the liquidity problems that had characterised the market had affected the NBET’s ability to deliver on its PPP obligations through the generation companies.

Fashola stated, “In order to strengthen the NBET, the CBN is approving a payment assurance guarantee for any energy produced by any generation company so that they can pay their gas suppliers when they get paid in order for the hydro plants to continue to operate.

“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money.”

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